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Social ties and home bias in mergers and acquisitions

Federico Carril-Caccia (), Aitor Garmendia-Lazcano and Asier Minondo ()
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Federico Carril-Caccia: Deusto Business School, Bilbao-San Sebastián
Aitor Garmendia-Lazcano: Deusto Business School, Bilbao-San Sebastián

Review of World Economics (Weltwirtschaftliches Archiv), 2023, vol. 159, issue 3, No 2, 563-593

Abstract: Abstract This paper explores whether social ties, proxied by Facebook friendship links, can explain why the number and value of mergers and acquisitions (M&As) are greater within countries than between countries. We find that social ties are positively correlated with the number and value of M&As. We also demonstrate that the home bias in M&As is greatly reduced once we control for the differences in social ties between and within countries. We further find that social ties particularly facilitate M&As when the level of corruption is high, press freedom is limited in the target country, and there are more cultural differences between the acquirer and target countries.

Keywords: Mergers and acquisitions (M&As); Social ties; Border effect; Facebook; foreign direct investment (FDI); European Union (EU) (search for similar items in EconPapers)
JEL-codes: F15 F21 F23 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s10290-022-00475-0

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